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Your Oct. 29 editorial on the corporate alternative minimum tax repeal being considered by Congress was way off the mark. While the piece finds that the alternative minimum tax is "flaky," it suggests that "refunds" of past payments are unjustified.
But those refunds, or credits, are already part of current law, and U.S.companies take about $4 billion each year in credits for prior alternative minimum tax paid. If the tax is repealed, the government has an obligation to honor remaining credits since they are an integral part of the structure that Congress passed in 1986.
It is true that Ford, General Motors and others stand to gain millions of dollars from alternative minimum tax credits upon repeal, which represent excess taxes paid in prior years. But let's put that in perspective. Annual reports for the two companies show that they owed an enormous $2.7 billion and $2.4 billion, respectively, in income taxes in the most recent fiscal year.
Besides, an industry journal such as Automotive News should realize that the corporate income tax is simply a smoke screen that hides $200 billion in taxes from the workers, consumers and shareholders who implicitly pay it. Corporations simply pass the tax through in the form of lower wages, higher prices and lower shareholder returns.
That is why Treasury Secretary Paul O'Neill has said we should consider eliminating the corporate income tax altogether. In the meantime, repeal of the alternative minimum tax will lift an unnecessary and wasteful burden from carmakers and U.S. industry in general.